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*** New decade lows for house price inflation
*** No blue skies ahead for retailers
*** The bear stretches and yawns...why investing like the rich isn't always a good idea...how to win at the casino ..and mor --------------------- – There’s very little in the way of good news for the UK economy at the moment. For one, annual house price inflation in both England and Wales fell to its lowest rate in just about a decade during the second quarter.
– According to the Land Registry today, house prices inched up just 5.4% from April to June compared to the second quarter in 2004, while the number of properties that were snapped up between April and June fell by an annual 28%, to 217,000.
– Moreover, the CBI today admitted that business confidence in all parts of the UK has fallen for the first time in two years.
– That’s not too surprising, bearing in mind that some 18,000 manufacturing jobs were slashed in the second quarter of this year, with the likes of Tiny computers sacking 1,500 employees when it went into administration last month.
– And there’s not much in the way of a silver lining: output for many firms may have increased, but this has not led to profit, as pricing power has weakened in the tough domestic markets faced by the companies.
– Meantime, the price of crude has pushed to new all- time highs in Asian trading, up to $62.69 per barrel, as America shuts its diplomatic buildings in Saudi Arabia for two days after receiving what it believes to be a threat to its personnel. Dated Brent also traded above the $60 a barrel mark, at $60.99.
– And what with investment bank Smith Barney telling UK retailers that there were “no blue skies” ahead for the industry, it’s no surprise the sector fell by 2% last week. Both Kingfisher and Next’s shares fell 2% on Friday, while M&S traded 1% down. The FTSE 100 also slipped 1 point, to close at 5,314 before the weekend, while the FTSE 250 traded 0.1% in the red, at 7,680.
– At least Barclays managed to trade 3% up on Friday, despite its Barclaycard division reporting a 17% tumble in profit, as bad debt provisions rose 20% to £700m. Barclays said its first-half pre-tax profit rose 9% to £2.7m – ahead of analyst expectations. Up until Friday, shares in Barclays have been the second-worst performer of all the listed UK banks.
– Only months after Nanjing Auto’s takeover of MG Rover, another stalwart of British industry may be set to fall into the hands of a Chinese company. According to newspaper reports, the struggling Marconi may be bought for £600m by its fast-growing Chinese partner Huawei Technologies. Is this another nail in the coffin of UK industry?
– And in Japan, Prime Minister Junichiro Koizumi has called early elections for September 11 after the Japanese upper house rejected his plans to privatise Japan’s postal system. Koizumi had hoped the move would help cut government spending and curb growth of Japan’s public sector debt, the largest in the world -------------------- How the Other Half Invests– Evidence suggests that wealthy US investors tend to hold highly diverse portfolios, and focus on preserving, rather than growing their wealth, says MoneyWeek’s Tim Price. This may serve the rich well, but the strategy is not suitable for everyone - an increasing focus among institutional investors on managing risk rather than opportunity can mean they miss out on some “impressive returns” for their clients.
Trailing a Gambling Haven– In Las Vegas, not just anyone can charge exorbitant fees for hotels and nightclubs...and still have flourishing demand. Yet that’s exactly the case with Steve Wynn’s latest casino resort, says Sven Lorenz in the Profit Hunter Files. The resort has been open just four months, but he’s already extending it. Moreover, because gambling has such high entry level, the competition is relatively low, while the margins are sky-high.
Nervously Awaiting The Bear– Expect the UK’s economic growth to turn negative, particularly as the credit cycle changes as more borrowers struggle to repay their debts, says RH Asset Management in its Onassis newsletter. The result? Not only are we heading for a recession, the stockmarkets remain unsafe, with the bear market potentially back.
Published in Money-Morning
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Heather D'Alton
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